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Lev, Tax Advisor

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Experience: Taxes, Immigration, Labor Relations

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This year (2012) I retired from one company effective Feb 1.

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This year (2012) I retired from one company effective Feb 1. My year to date earnings with them including severance Pay was 161,941.86. Total Fed Tax Withheld was 39,388.36. Other taxes withheld were Fed Med/EE 2,349.03 and Fed OASDI/EE 4,624.20.

Also, on FEB 1, 2012 I started another job which is paying me around 24,000 per month.

Question is: How do I figure my Estimated tax payments and what do I add together to get my total taxes and total income. Since nearly 40,000 of taxes have already been paid in this year I need to start paying on quarterly basis right away. Just not sure where to start.

Hi and welcome to Just Answer!The first step - we need to estimate your total tax liability. -- gross pay from your previous job - $161,941 -- expected wages from your new job $24,000 * 11 = $264,000Total $425,941Assuming you are single, standard deduction, no dependents, no other deductions or credits - your expected tax liability would be ~$123,000.It might be less if you itemize or have other deductions.

Next step - you estimate your withholding. Assuming you filed W4 form with your new employer as Single with two allowances - your expected income tax withholding will be $6360*11=$69,960Total withholding $39,388 + $69,960 = $109348

For 2012, the maximum taxable earnings amount for Social Security (OASDI) taxes is $110,100. There is no limitation on taxable earnings for Medicare's Hospital Insurance (HI) taxes.

It is possible that your new employer will withheld Social Security (OASDI) taxes - if yes - you will be able to claim a refund on your tax return for $4624.

If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.

Thus - if your prior year tax liability is less than your expected payments - $113972 - you are not required to make estimated payments - and may pay all your tax liability by Apr 15 following year.

The first step - we need to estimate your total tax liability. Assuming you are single, standard deduction, no dependents, no other deductions or credits - your expected tax liability would be ~$123,000.Plus self-employment taxes $264,000 * 2.9% = $7656Total expected tax liability - $130,656.You might deduct some self-employment expenses - and that will reduce your income and self-employment tax liability.Your tax liability might be less if you itemize or have other deductions.

As I mentioned above - if you will pay at least 100% of the tax shown on your return for the prior year - there will not be underpayment penalties - and you will be able to pay the remaining tax liability by Apr 15m, 2013 - just be sure to have these money.

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. OrvilleHesperia, California

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